Earnings at insurer Great Eastern took a belting in the third quarter due in part to a weaker stock market and reduced interest rates.
The tougher environment sent net profit down 65 per cent to $68.4 million in the three months to Sept 30, it reported yesterday.
Profit from the insurance business came in at $68.2 million, a 62 per cent decline from the same quarter last year.
A re-valuing of assets in the light of widening credit spreads, declining equity prices and falls in long-term interest rates was behind the weaker numbers, said Great Eastern, which is a unit of OCBC Bank.
That left the group with a third-quarter non-operating loss of $78.7 million, reversing the non-operating profit of $14.1 million in the same period a year earlier.
A few large death claims of about $1 million per life and higher medical claims in Singapore also took a toll on profits, while the weakening of the Malaysian ringgit against the Singapore dollar dented contributions from operations in Malaysia.
AT A GLANCE
NET PROFIT: $68.4 million (-65%)
GROSS PREMIUMS: $2.53 billion (+19%)
Great Eastern said it is not unusual for claims to fluctuate each quarter, adding that on a year-to-date basis, claims levels are stable.
Operating profits in the quarter fell 13 per cent to $129.5 million from last year.
Gross premiums rose 19 per cent to $2.53 billion while total weighted new sales rose 33 per cent to $266.2 million, driven by strong demand for two new products launched in Singapore during the quarter and stable growth in Malaysia.
New business embedded value - a measure of long-term economic profitability - rose 16 per cent to $101.6 million on the back of higher sales.
Great Eastern's profit from shareholders' fund investments came in at $38.6 million, down
13 per cent from last year, as higher net investment income and
foreign exchange gains from United States dollar-denominated investments failed to make up for the unrealised loss from the sale of other investments.
Third-quarter earnings per share stood at 15 cents, down from 41 cents a year earlier while net asset value per share was $12.59 as at Sept 30, up from $12.41 as at Dec 31.
Mr Norman Ip, director and acting group chief executive, said: "The group delivered robust growth in new sales during the quarter, particularly in Singapore, with the introduction of new products.
"Moving into the fourth quarter, we have lined up more new products and are optimistic of sustaining the existing sales momentum."
The results were released before markets opened. Great Eastern shares closed up 24 cents at $21 yesterday.